- New users have fallen by 50% per month, although of course users to my app are a fraction of total new users, but you can extrapolate
- Total net, users are withdrawing about as much money as users are putting in
- The amount of loans purchased has dropped significantly
So without a doubt, retail investors know what's going on and fear for the safety of their investments.
[0] https://itunes.apple.com/us/app/lendingclub-order/id10461141...
All fine with me as long as they are aggregated statistics for a reasonable sized population of users.
If true, would that be considered fraud?
Really, yes obviously that's fraud but apparently it's perfectly normal as long as you don't get caught.
Artificially inflating the numbers whilst shopping for investments is definitely not acceptable. Pumping money around is an old trick to inflate the visible size of a company, some of these schemes are surprisingly hard to detect (the one here definitely isn't).
I'm somewhat surprised that there was no oversight in place that would have stopped this, that's serious money.
[1]:http://www.huffingtonpost.com/avinash-tharoor/banks-cartel-m...
Ubers are consistently safer than taxis, provide better customer service, don't intentionally take long routes to scam you, actually take credit card instead of pretending their credit card reader is broken, don't refuse to drive you because you have luggage or are going a short distance or are living in a bad part of town, etc etc.
It turns out that Uber's rating system is much better for people's protection than whatever laws and background checks taxis are subject to.
They're different experiences and certainly innovating. Just because they had to overcome legislation to grow does not mean that regulatory subversion is their only benefit.
Props to Uber for execution, but all the pieces were there.
[1]-edit: some in the smartphone, but most in the old "makes calls" cell phones
Taxis.
Who would have thought that the basic laws of lending apply to fintech startups?
As long as they don't have any debt on the books you are pretty safe. If they did have debt there might be some question about order of payment to creditors.
https://www.federalreserve.gov/releases/chargeoff/delallsa.h...
From this halcyon point, there's more downside risk than upside going forward. Unless the cyclical nature of debt defaults suddenly stopped after centuries.
(I have zero affiliation with Lending Club, just like the returns.)
http://www.barchart.com/chart.php?ss=1&spread=LC+%2F+SPY&p=I...
But personally, I don't try to read tea leaves. Set my stop limits so I don't have to watch it like a hawk, set an alert for the upper limit, and watch LC news strictly for entertainment value. Because thought the story is somewhat interesting, it's not anything we haven't seen before with companies like Tyco and Adelphi.
We've got a good handle on things like punishing criminals that rob someone at gunpoint. However, we struggle with seeing the CEO making short term loan to his company as theft from investors (the short term loan hid the fact that the company wasn't meeting its presumably publicly announced growth targets).
The issue is that white collar crime needs to show criminal intent. But, in this case the CEO didn't have criminal intent to steal, rather his intent was simply to boost his business (with the consequence of misleading investors).
As for intent, the law has centuries of precedent to incorporate into criminal statutes that affect corporate activities. It's just that the standards are artificially high and don't take into account the diffuse nature of the enterprise. But we have several decades of even that which could be applied, but isn't.
That's the second time today I see this, is this some kind of meme?
If corporations are persons, and they can commit felonies, why not give them punishments that are analogous to what you'd give a person who committed a felony?
So just... why take _these_ risks? It doesn't have a realistic chance of helping any viable strategy that I can think of.
